THE EFFECT OF FISCAL DECENTRALIZATION ON ECONOMIC GROWTH AND ECONOMIC DISPARITY IN MALUKU PROVINCE

The success of development can be achieved through increasing the economic growth that will then synergize with the improvement of the society welfare as the main goal of a country. Through the regional autonomy policy implemented effectively by the government as of 1st January 2001 and to be recognized as a very democratic policy because the government system in Indonesia adhered to the principles of decentralization, deconcentration and co-administration duty which implicated on equitable, fair and balanced development growth, it is expected to provide positive impact on the economic growth in the autonomous region.This study aimed to analyze the effect of fiscal decentralization on economic disparity among the regions in Maluku Province either directly or through the economic growth.The type of the data used is pooled data which is as combination of time series data that is 2010 to 2016 and cross section data was eleven regency municipality, using by regression pooled data analysis with the help of Eviews 9 software. The results of the study shown that the fiscal decentralization did not affect the economic disparity. The Economic growth has a negative and significant effect to economic disparity among the region. The Fiscal decentralization has a significant effect on economic disparities through economic growth, due to the increasing of fiscal decentralization raised the economic growth and pressed economic disparities among the regions.